Trade-Ideas: KBR (KBR) Is Today's

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified KBR ( KBR) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified KBR as such a stock due to the following factors:

  • KBR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.3 million.
  • KBR has traded 550,828 shares today.
  • KBR traded in a range 230.4% of the normal price range with a price range of $1.03.
  • KBR traded above its daily resistance level (quality: 55 days, meaning that the stock is crossing a resistance level set by the last 55 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on KBR:

KBR, Inc. operates as an engineering, construction, and services company worldwide. The company's Gas Monetization segment designs and constructs liquefied natural gas and gas-to-liquids facilities. The stock currently has a dividend yield of 1.7%. Currently there are 7 analysts that rate KBR a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for KBR has been 1.6 million shares per day over the past 30 days. KBR has a market cap of $2.7 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.94 and a short float of 2.9% with 2.17 days to cover. Shares are down 41.6% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates KBR as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Construction & Engineering industry. The net income increased by 163.8% when compared to the same quarter one year prior, rising from -$47.00 million to $30.00 million.
  • KBR's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
  • KBR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KBR INC reported lower earnings of $0.02 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus $0.02).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Construction & Engineering industry and the overall market, KBR INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for KBR INC is currently extremely low, coming in at 2.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.81% trails that of the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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